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March 07, 2002 at 07:00 PM
NU Online News Service, Mar. 7, 6:22 p.m. – Speeding up the life insurance underwriting process at a typical insurer could cut costs and increase sales enough to compensate for a 4% increase in mortality costs, according to an underwriting process expert.
Maria Thomson, a Brimfield, Mass., actuary and underwriting consultant, says current methods are so expensive, take so long and scare off so many qualified applicants that they keep insurers from reaching middle-income customers.
“This is a major industry survival issue,” Thomson says.
She worries about survey data from LOMA, Atlanta, revealing that insurers lose about 20% of the applicants who go through a full underwriting process, which takes an average of about six weeks.
Insurers lose 5% for miscellaneous reasons, 5% because applicants are withdrawn, and 5% because applicants are rejected
Insurers lose another 5% to cold feet.
About a dozen companies that are developing or already selling systems for improving the underwriting process.
Guaranteed Quotes, Edmond, Okla., is a brokerage that is trying to help by “pre-underwriting” applicants, then asking life insurers to bid on the fully underwritten applications.
